Zcash Likely Bound for Brief Correction After 80% Gains

Zcash appears bound for a brief correction after its price skyrocketed by 80%.

Key Takeaways

Zcash has risen by more than 80% over the last five days to hit $265, its highest price since May.

The bullish impulse was likely fueled by news that the network will transition to proof-of-stake.

ZEC could now be bound for a spike in profit-taking before the uptrend resumes.

Zcash made headlines last week after developers announced the network would move from proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism. Although the transition may take up to three years to complete, ZEC has gained significant bullish momentum in the wake of the announcement. 

Zcash Is Back in the Green

Zcash is soaring after the development company behind it, Electric Coin Company (ECC), revealed plans to transition to a PoS consensus algorithm. 

In a recent blog post, ECC’s CEO Zooko Wilcox made the case in favor of switching the network to PoS. He highlighted the need to decrease the downward price pressure on ZEC from miners and increase the utility of the token. Wilcox argued that PoS would make Zcash “more decentralized, attack- and capture-resistant and egalitarian,” strengthen security, and improve performance. 

The transition to PoS could be “achievable within three years,” according to ECC. Still, cryptocurrency enthusiasts appear to have welcomed the news. Zcash has seen its market value surge by more than 80% since the announcement on Nov. 19, going from $146 on Nov. 18 to a recent high of $265 today. 

The privacy-coin could be bound for a brief correction before advancing further. The Tom DeMark (TD) Sequential indicator presented a sell signal on ZEC’s 4-hour chart as prices failed to overcome resistance. A spike in selling pressure around the current price levels could help validate the bearish formation, resulting in a retracement to the $227 support before the uptrend resumes. 

Zcash/US dollar price chart (Source: TradingView)

Given the rising optimism around Zcash, it would be prudent to watch out for a decisive 4-hour candlestick close above $262. Breaching such a crucial resistance area can boost investors’ confidence and extend the uptrend towards higher highs. ZEC could then surge towards $304 or even retest mid-May’s high of $373. 

Disclosure: At the time of writing, the author of this feature owned BTC and ETH.

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Source: cryptobriefing.com